If the Federal Reserve sets a target nominal interest rate, it can:
A. only set a money supply target that is consistent with the nominal interest rate target.
B. shift the money demand curve to the right.
C. achieve this target with any arbitrary supply of money.
D. independently set a target money supply.
Answer: A
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If the cross price elasticity of demand between two commodities is positive, then these commodities are
A. are complements. B. are substitutes. C. are inferior. D. are superior.
The slow growth coming out of the Great Recession caused the Fed to
A. focus exclusively on the traditional tools of monetary policy. B. employ discretionary fiscal policy. C. employ nondiscretionary fiscal policy. D. employ new tools of monetary policy.
Keynes referred to the emotions that shift supply and demand as ________.
A. preferences B. austerity measures C. animal spirits D. speculative bubbles
Refer to Table 14-8. If the firms cooperate, what prices will they select?
A) Brawny Juice will select a low price; Power Fuel a high price. B) Both firms will select a high price. C) Brawny Juice will select a high price; Power Fuel a low price. D) Both firms will select a low price.